Guilds already have options to show off, like the custom Guild Logo appearing next to the character for example.
Also, I wouldnt like to run around in Guild Robes all the time if I have an uber piece of armor to show off with, for example

For Castle Siege indeed, attacking and defending guilds should have different robes though.

Lol... one side is color blue while the other is red. Just to show who is on what side.

That wouldnt really work out. In Castle Siege, a Guild can occupy a Castle, and its Union can help them defend it.
The Defenders are all in the same camp, lets say Dione, but Attackers can be from both camps, Eos and Dione. So if you divided Eos and Dione into blue and red, some attackers and defenders would have the same color, which makes this idea pointless.
My idea was to give attackers and defenders have different colors, as each group fights for the same goal.